{"id":10730,"date":"2026-05-19T20:56:20","date_gmt":"2026-05-19T20:56:20","guid":{"rendered":"https:\/\/usatrustedlawyers.com\/blog\/u-s-department-of-treasury-and-small-business-administration-release-loan-forgiveness-application-form-and-instructions-for-paycheck-protection-program\/"},"modified":"2026-05-19T20:56:20","modified_gmt":"2026-05-19T20:56:20","slug":"u-s-department-of-treasury-and-small-business-administration-release-loan-forgiveness-application-form-and-instructions-for-paycheck-protection-program","status":"publish","type":"post","link":"https:\/\/usatrustedlawyers.com\/blog\/u-s-department-of-treasury-and-small-business-administration-release-loan-forgiveness-application-form-and-instructions-for-paycheck-protection-program\/","title":{"rendered":"U.S. Department of Treasury and Small Business Administration Release Loan Forgiveness Application Form and Instructions for Paycheck Protection Program"},"content":{"rendered":"\n
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August 27, 2020 Update. On August 24, 2020, the Small Business Administration (\u201cSBA\u201d), in consultation with the U.S. Department of the Treasury (\u201cTreasury\u201d), published the Interim Final Rule on Treatment of Owners and Forgiveness of Certain Nonpayroll Costs, which addresses: (1)\u00a0the ownership percentage that triggers the applicability of owner compensation rules for forgiveness purposes, and (2) limitations on the eligibility of certain nonpayroll costs for forgiveness. Specifically, the rule discusses the eligibility for forgiveness of nonpayroll costs attributable to a tenant (or sub-tenant), household expenses of home-based businesses, and rent and mortgage interest payments made to related parties. This interim final rule supplements the interim final rules previously posted by the SBA and discussed below. This guidance has been incorporated into this updated post.
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August 7, 2020 Update. On August 4, 2020, the SBA, in consultation with the Treasury, published responses to questions frequently asked by Borrowers (as defined below) and lenders (the \u201cAugust 4 FAQs\u201d) concerning forgiveness of loans made under the Paycheck Protection Program (\u201cPPP\u201d) created by the Coronavirus Aid, Relief, and Economic Security Act (the \u201cCARES Act\u201d) and amended by the Paycheck Protection Program Flexibility Act (the \u201cFlexibility Act\u201d). The below post has been updated to reflect this guidance. The last date on which a PPP Loan (as defined below) application may be approved is August 8, 2020.
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July 7, 2020 Update. On July 4, 2020, President Trump signed a bill extending the application period for loans under the PPP created by the CARES Act for five weeks, from June 30, 2020 until August 8, 2020. According to the SBA PPP Report<\/a>, as of June 30, 2020, nearly $132 billion of the $659 billion in funds set aside for PPP remains available for businesses seeking subsidies for payroll and other eligible expenses. This amendment has been incorporated into this updated post.<\/div>\n

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June 30, 2020 Update. On June 26, 2020, the Small Business Administration (the \u201cSBA\u201d), in consultation with the \u201cTreasury, published the Interim Final Rule on Revisions to Loan Forgiveness Interim Final Rule and SBA Loan Review Procedures Interim Final Rule<\/a> (the \u201cRevised Forgiveness Rule\u201d) which addresses, in part, the effect of an employee\u2019s rejection of the Borrower\u2019s good faith, written offer to rehire the employee or restore his or her hours. In the Revised Forgiveness Rule, the SBA and the Treasury determined that the new statutory safe harbor regarding individuals who refuse an offer to be rehired supersedes the previous exemption in the Interim Final Rule on Loan Forgiveness on this particular issue. However, the exemption in the Interim Final Rule on Loan Forgiveness remains regarding individuals who refuse an offer to restore their hours. This guidance has been incorporated into this updated post.<\/div>\n

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June 18, 2020 Update. On June 16, 2020, the SBA, in consultation with the Treasury, issued a Revised Paycheck Protection Program Loan Forgiveness Application<\/a> (the \u201cFull Application\u201d), which implements the amendments contained in the Flexibility Act.<\/p>\n

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In addition to revising the full application, the SBA released the new EZ Paycheck Protection Program Loan Forgiveness Application<\/a> (the \u201cEZ Application,\u201d and, together with the Full Application, the \u201cApplications\u201d), which requires fewer calculations and less documentation if a business that receives PPP Loans (a \u201cBorrower\u201d) falls into one of the following categories: (1)\u00a0the Borrower has no employees and is self-employed or an independent contractor; (2)\u00a0the Borrower did not reduce the salaries or wages of any of its employees by more than 25% and did not reduce the number or hours of its employees; or (3)\u00a0the Borrower experienced reductions in business activity as a result of health directives related to COVID-19 and did not reduce the salaries or wages of any of its employees by more than 25%. The corresponding EZ Application Instructions are available here<\/a>.<\/p>\n

The changes to the Applications and corresponding instructions have been incorporated into this updated post.
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June 8, 2020 Update. On June 5, 2020, President Trump signed into law the Flexibility Act, which amends certain provisions of the PPP created by the CARES Act, and makes it easier for Borrowers to achieve full PPP Loan forgiveness. The Flexibility Act: (1)\u00a0extends the covered period for loan forgiveness to 24 weeks (but not later than December 31, 2020), and gives Borrowers that received a PPP Loan prior to the date of enactment (June 5, 2020) the option to use the original 8-week covered period; (2)\u00a0reduces the amount of the PPP Loan that must be used on eligible payroll expenses to qualify for forgiveness from 75% to 60%; (3)\u00a0creates new exceptions that would allow Borrowers to qualify for full loan forgiveness if they are unable to restore their workforce levels to pre-pandemic levels because the Borrower cannot find qualified employees; (4)\u00a0changes the loan repayment period for loans originated after the enactment of the Flexibility Act (June 5, 2020) from two to five years (and expressly allows Borrowers and lenders to mutually agree to modify the maturity date of existing loans accordingly); and (5)\u00a0extends the deferral period for payment of principal, interest, and fees on PPP Loans from six months until the date on which the amount of forgiveness determined under the CARES Act is remitted to the lender (or, if the Borrower does not apply for loan forgiveness, 10 months after the end of the Borrower\u2019s loan forgiveness covered period). On June 8, 2020, Treasury Secretary Steven Mnuchin and SBA Administrator Jovita Carranca issued a joint statement<\/a> clarifying that, under the PPP Flexibility Act, Borrowers \u201cwill continue to be eligible for partial loan forgiveness, subject to at least 60 percent of the loan forgiveness amount having been used for payroll costs\u201d where the Borrower \u201cuse[s] less than 60 percent of the loan amount for payroll costs during the forgiveness covered period.\u201d<\/p>\n

A\u00a0detailed explanation of the amendments is available in our memorandum to clients, Key Changes Enacted in the Paycheck Protection Program Flexibility Act of 2020.
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May 28, 2020 Update. On May 22, 2020, the SBA, in consultation with the Treasury, released the Interim Final Rule on Loan Forgiveness<\/a> and the Interim Final Rule on SBA Loan Review Procedures and Related Borrower and Lender Responsibilities<\/a>, which provide Borrowers with further guidance regarding loan forgiveness and provide lenders with guidance on their responsibilities. The Interim Final Rule on Loan Forgiveness provides, among other things, that a Borrower may exclude from the workforce reduction formula any reduction in full-time equivalent employee headcount attributable to a particular employee if: (1)\u00a0the Borrower made a good faith, written offer to rehire the employee or restore his or her hours (if applicable) during the covered period or the alternative payroll covered period; (2)\u00a0the offer was for the same number of hours and the same salary or wages earned by the employee \u201cin the last pay period prior to the separation or reduction in hours\u201d; (3)\u00a0the employee rejected the offer; (4) the Borrower maintains appropriate records; and (5)\u00a0within 30 days of the employee\u2019s rejection of the offer, the Borrower informs the applicable state unemployment insurance office of the rejection. This guidance has been incorporated into this updated post.
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Summary. The PPP is an unprecedented forgivable loan program, created by the CARES Act. As set forth in our memorandum to clients, \u201cCoronavirus Aid, Relief, and Economic Security Act\u2014Key Employer Takeaways,\u201d the PPP provides low-interest loans to qualifying small businesses and other eligible borrowers (\u201cPPP Loans\u201d). The PPP incentivizes Borrowers to retain and pay employees by forgiving all or a portion of PPP Loans spent on qualifying expenses. The CARES Act was enacted on March 27, 2020 and the application process for PPP Loans became operational on April 3, 2020.<\/p>\n

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On May 15, 2020, the SBA, in consultation with the Treasury, released<\/a> the Paycheck Protection Program Loan Forgiveness Application<\/a>, which was revised on June 16, 2020. On June 17, 2020, the EZ Paycheck Protection Program Loan Forgiveness Application<\/a>, as well as corresponding step-by-step instructions for Borrowers seeking forgiveness of some or all of their PPP Loans, were released. Among other things, the Applications and instructions provide: (1)\u00a0additional information regarding the expenses eligible for forgiveness; and (2)\u00a0instructions for calculating the loan forgiveness amount.<\/p>\n

I. Qualifying Expenses<\/p>\n

The CARES Act provides that Borrowers are eligible for forgiveness of PPP Loans for amounts spent on qualifying expenses during the Covered Period. The Covered Period for Borrowers whose loans were disbursed on or after June 5, 2020 is 24 weeks from loan disbursement or December 31, 2020, whichever comes first. Borrowers whose loan proceeds were disbursed prior to June 5, 2020 will have the option to choose between\u00a0an 8-week period and 24-week period. The loan disbursement date is the first date on which a Borrower received PPP Loan proceeds from its lender. Qualifying expenses include certain eligible payroll costs (\u201cPayroll Costs\u201d), as well as certain covered mortgage obligations, rent obligations and utility payments (collectively, \u201cNon-Payroll Costs\u201d), as set forth in more detail below.<\/p>\n